Agency, contractor defend retirement system

By Gail Repsher Emery

Jul 24, 2003

Federal officials testifying at a congressional hearing Thursday stood behind prime contractor Matcom International Corp. and the computer system it developed for managing the government's Thrift Savings Plan.

The officials said glitches in the system are being corrected, and a massive paperwork backlog that arose with conversion to the new system is being eliminated. As a result, system response times are improving daily, they said.

About 170 bugs have been identified in the system, but they are 'nothing that is going to take the system down. As we eliminate them, I think you are going to find everything speeds up,' Andrew Saul, chairman of the Federal Retirement Thrift Investment Board, told the House Committee on Government Reform.

Users have been frustrated by long waits to log on and complete transactions. Currently, they are advised to avoid using the system during peak hours, from 8 a.m. to 4 p.m.

'But what good is a Web site providing access to $113 billion in plan assets when you have to log on at three in the morning?' asked Rep. Tom Davis, R-Va., chairman of the committee, who said he realized 'the enormity and complexity of the project.'

The system launched June 16, 23 months after Matcom of Alexandria, Va., took over the troubled project. The Federal Retirement Thrift Investment Board hired Matcom after firing American Management Systems Inc., which had worked on the project for four years without launching it.

The Thrift Savings Plan is a retirement savings plan, similar to a 401(k) plan, for civilian and military government employees. It is the largest defined contribution plan in the world, serving 3 million people and holding $113 billion in assets, according to Gary Amelio, executive director of the Federal Retirement Thrift Investment Board.

Matcom's system brought the plan into the 21st century, Amelio said. It is designed to process employee transactions and value the five TSP retirement funds daily, rather than monthly.

It also reports account balances in shares as well as dollars for the first time, and offers a greater number of withdrawal options. For the first time, it also allows plan participants to apply online for loans from their retirement accounts.

The board spent $6.5 million on testing to make sure the system would work when it went live, Saul said. Its performance has been slow, but it has not gone down.

'We believe this system is a good system. It will be three or four weeks until it is cleaned up,' Saul said.

The new system was designed to handle 50,000 transactions per hour, but has only recently reached that level ' and surpassed it, to handle 60,000 transactions per hour. When the system first went live, it processed 100,000 transactions a day, Lou Ray, Matcom's president and chief executive officer, said in an interview.

Performance has increased substantially since the TSP system went live, Amelio said. On July 21, it processed 813,000 transactions. The old system processed as many as 500,000 transactions only on one day of its life, he said.

The board has also added two Web servers to help speed processing time, bringing the number of Web servers dedicated to the system to four.

Ray said problems with the systems' processing software were tying up the mainframe, but 'response times have been getting faster and faster. We make a significant change every two to three days.

The goal is to be able to log on in one to two seconds, Ray said.

'If it takes six to seven seconds, that's slow. Early on, we had some transactions where you might sit there for minutes. That is unacceptable to anybody,' he said.

In some cases, users have been unable to conduct transactions online at all, according to members of Congress who reported myriad calls from constituents upset by the online delays, as well as their inability to get help over the phone or by mail from the National Finance Center in New Orleans.

The center, run by the Department of Agriculture, uses the Matcom system to process participant transactions received by mail and provides telephone customer service.

Rep. Chris Van Hollen, D-Md., reported receiving eight to 10 constituent letters a day about the new system, including one from a retired Marine colonel who was trying to save his home from foreclosure but could not get an application for a loan from his retirement account processed through the system.

It was hard to judge demand for the systems' new features, and some features have been used so much that they caused unexpected system slowdowns, Ray said.

'Many people were filling out a loan request to see if it would be acceptable, and then they weren't processing it. We had three times as many requests as those that became loans. We weren't expecting that at all,' he said. 'There was no way to have that [usage] data because it wasn't possible to do [loans] with the old system. Everybody made their best guesses about transaction volumes.'

A backlog in processing 70,000 paper-based loan and withdrawal transactions also resulted with the move to the new system. Loan applicants whose paperwork was not processed before the new system went live had to fill out a new form that had all the data required by the new system. That meant their applications took longer than usual to process, according to Federal Retirement Thrift Investment Board officials.

The backlog should be eliminated within a month, Saul said. All new loan applications should be processed within 10 days, the industry standard, according to Amelio.

Contractor employees at two sites ' Matcom's facility in Fair Oaks, Va., and subcontractor SunGard Data Systems Inc. in Birmingham, Ala. ' are helping clear the backlog by doing manual data entry, along with additional staff reassigned to the task at the National Finance Center, according to Amelio and Saul.

However, 'we probably waited a week too long to set up those backup sites,' Saul said. 'We got into a dire situation.'

Tom Trabucco, spokesman for the Thrift Savings Board, said the additional data-entry staff was put on the job about two weeks ago, more than three weeks after the system went live.

'For the most part, I do not think this is a technology problem. We got buried by a massive amount of data entry that came in during the conversion process. The human way, that's where we have failed,' Saul said.

In addition to SunGard, Matcom's subcontractors include Centech Group Inc., Computer Sciences Corp., Keane Inc.'s Federal Systems unit and Savantage Financial Services Inc. Matcom's contract with FRTIB is worth about $26 million, according to the board.

Matcom employs more than 600 people and had $70 million in revenue in fiscal 2003.